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Research on Cultural Integration Strategy in Cross - border mergers
and acquisitions
Xiaoman Zhao
5817192026
AN INDEPENDENT STUDY SUBMITTED IN PARTIAL FULFILLMENT
OF THE REQUIREMENTS FOR
THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION
GRADUATE SCHOOL OF BUSINESS
SIAM UNIVERSITY
2017
cultural integration strategy, and gives the concrete operation steps.
The first chapter is the introduction part, mainly introduces the research
background and the research purpose; the second chapter introduces the background
and the theories of the cross-border mergers and acquisitions, and the status quo of
research at home and abroad are expounded; The third chapter is mainly about the
research design of this study, introduces the research framework of this study, and
elaborates the research methods and objects of this study. The fourth chapter starts
with the cross-border mergers and acquisitions of Chinese enterprises, analyzes the
status and characteristics of cross-border mergers and acquisitions in China, leads to
the specific case of mergers and acquisitions in October 18, 2011 that Haier Group’s
acquisition of Sanyo Electric Group, by way of a questionnaire survey to promote the
understanding of cultural integration achievements of this case. The fifth chapter
gives the concrete advice and countermeasure to the enterprise cultural integration
after the cross-border mergers and acquisitions respectively from the government
level and enterprise level, forms a set of corporate mergers and acquisitions strategy
of cultural integration, and gives the specific steps; the sixth chapter is the summary
of this study, it gives the conclusions of this study and prospects for the future.
China's cross-border mergers and acquisitions are still in the primary stage,
there are no mature experience and skills to follow, especially in the methods of
mergers and acquisitions, and in the process of mergers and acquisitions. Moreover,
the difference between Chinese and foreign cultures is the key factor to restrict the
process of mergers and acquisitions, and in practice, there is a big dilemma. Therefore,
in multinational mergers and acquisitions, cultural integration plays an important role,
and with China's current situation as a starting point, learn from the experience of
foreign enterprises, it is of great practical significance to provide concrete advice and
corresponding strategies for Chinese enterprises to solve the problem of cultural
integration in cross-border mergers and acquisitions.
Key words: enterprise; cross border; merger and acquisition; culture;
integration strategy
v
Acknowledgements
I would like to express my gratitude to all those who helped me during the
writing of this thesis.
My deepest gratitude goes first and foremost to Professor Qiu Chao, my
supervisor, for his constant encouragement and guidance. He has walked me through
all the stages of the writing of this thesis. Without his consistent and illuminating
instruction, this thesis could not have reached its present form.
Second, I would like to express my heartfelt gratitude to Siam University, the
school which given me a great chance to study the MBA curriculum. I am also greatly
indebted to the professors and teachers at the International Sino College, who have
instructed and helped me a lot in the past two years.
Last my thanks would go to my beloved family for their loving considerations
and great confidence in me all through these years. I also owe my sincere gratitude to
my friends and my fellow classmates who gave me their help and time in listening to
me and helping me work out my problems during the difficult course of the thesis.
CONTENTSABSTRACT................................................................................................................... i
ABTTRACT-CHINESE............................................................................................. iii
Chapter 1 Introduction................................................................................................ 1
1.1Research background and significance......................................................... 1
1.2The purpose of the study................................................................................ 3
Chapter 2 Theories of cross-border mergers and acquisitions and literature
review.............................................................................................................................4
2.1 The Development Course of Cross - border mergers and acquisitions of
Chinese Enterprises..............................................................................................4
2.2 Overview of corporate culture theory.......................................................... 5
2.2.1 Related concepts of corporate culture and its role...........................5
2. 2. 2 Characteristics of corporate culture................................................7
2. 3 An overview of corporate culture integration.............................................7
2.3.1 The concept of corporate culture integration................................... 7
2.3.2 The meaning of cultural integration of transnational mergers and
acquisitions....................................................................................................8
2.3.3 Necessity of enterprise culture integration in cross-border
mergers and acquisitions............................................................................. 9
2. 4 Types and advantages of cross-border mergers and acquisitions...........10
2.4.1 Types of cross-border mergers and acquisitions............................ 10
2.4.2 Advantages of cross-border mergers and acquisitions...................11
2.5 Research status quo at home and abroad.................................................. 13
2.5.1 Research status abroad..................................................................... 13
2.5.2 Current domestic research............................................................... 14
Chapter 3 Research Design....................................................................................... 15
3.1 Research Framework...................................................................................15
3.2 Research methods.........................................................................................16
3.2.1 Method of literature collection.........................................................17
3.2.2 Questionnaire survey........................................................................ 17
3.3 Research subjects......................................................................................... 18
Chapter 4 Case Study - A Case Study of Haier Group's acquisition of Sanyo
Electric.........................................................................................................................20
4.1 An analysis of the status and characteristics of Chinese enterprises'
multinational merger......................................................................................... 20
4.2 An analysis of cultural differences in cross - border mergers and
acquisitions..........................................................................................................22
4.2.1 An analysis of cultural differences between China and Japan......22
4.2.2 Corporate cultural differences in cross-border mergers and
acquisitions..................................................................................................24
4.3 An analysis of the problems in the cultural integration of cross - border
mergers and acquisitions in Chinese enterprises............................................ 27
4.3.1 Problems on the integration of Chinese enterprises in human
resources......................................................................................................27
4.3.2 Problems on corporate culture difference between countries.......27
4.3.3 Problems on cross - cultural integration management capability of
Chinese enterprises.................................................................................... 27
4.3.4 Problems on the degree of Chinese enterprise culture identity.... 28
4.4 Multifactor analysis of cross - cultural integration of Chinese................ 29
4.5 Cultural integration of transnational mergers and acquisitions of Haier
Group...................................................................................................................30
4.5.1 Company profile................................................................................30
4.5.2 An analysis of reasons in mergers and acquisitions....................... 31
4.5.3 An analysis of cultural differences among enterprises.................. 31
4.6 Assumptions on integration of corporate culture and verification survey32
4.6.1 Make assumptions.............................................................................32
4.6.2 Questionnaire design.........................................................................33
4.6.3 Statistics and analysis of questionnaire results...............................33
4.7 Experiences to the cultural differences...................................................... 36
Chapter 5 Suggestions on Cultural Integration of Multinational mergers and
acquisitions Enterprises.............................................................................................38
5. 1 Government-level recommendations.........................................................38
5.1.1 Strengthen supervision of the relevant service system...................38
5.1.2 Formulate national development strategic planning and
implementation of support policies...........................................................38
5.1.3 Improve the examination and approval system..............................39
5. 2 Enterprise-level recommendations............................................................ 40
5.2.1 Vigorously cultivate and use transnational business talents......... 40
5.2.2 Institutional innovation and the implementation of global business
strategy........................................................................................................ 40
5.2.3 Taking innovation as a guide, forming technological competitive
advantage as soon as possible....................................................................41
5.2.4 Development and implementation of a strategic plan for mergers
and acquisitions integration...................................................................... 42
5.2.5 Attach great importance to corporate culture integration............ 43
5.2.6 Boldly cultivate and use professional integration managers.........43
5.2.7 Efforts to increase the integration of corporate culture................ 44
5.2.8 Focus on speed integrated value...................................................... 45
5.2.9 Beware of "small swallow big"........................................................ 46
5.3 The Strategy of Cultural Integration in Merger and Reorganization.....47
5.3.1 The process of corporate culture integration..................................47
5.3.2 The principle of corporate culture integration...............................48
5.3.3 Process of corporate culture integration for cross-border mergers
and acquisitions.......................................................................................... 50
5.4 Suggestions on the concrete operation of enterprise culture integration
in cross - border mergers and acquisitions...................................................... 54
5.4.1 Employing international management talents after the acquisition55
5.4.2 Absorb different cultures, and create common ground................. 55
5.4.3 Training for different cultures..........................................................55
5.4.4 Play the lead role model of business leaders................................... 56
5.5 Conclusion.....................................................................................................56
References................................................................................................................... 59
Chapter 1
Introduction
1.1Research background and significance
With the advent of information technology, cross-border mergers and
acquisitions and cross-border management of enterprises have made great progress.
Multinational companies have been gradually expanded from the original scale to the
way of transnational investment changes. European debt crisis in 2012 has made the
development of the global economy reduced, and made the number of cross-border
mergers and acquisitions decreased and made them smaller in scale. Moreover, its
adverse effects have further affected the economic development of some emerging
countries. This effect is gradually shifting from developed countries to developing
countries. According to recent data, China and other parts of Asia, Mergers and
acquisitions surged, and the speed sustained rapid growth. Compared with 2007, the
number and the scope of mergers and acquisitions in 2012 have been tripled.
Enterprises can take advantage of cross-border mergers and acquisitions
approach to reduce barriers to overseas trade, and achieve low-cost development of
overseas markets so as to continuously enhance the core competitiveness of
enterprises. However, recent data show that half of the mergers and acquisitions are
not achieving their desired goals. More seriously, some companies also appeared in
the case of loss. The reasons for this phenomenon are multifaceted, but the cultural
differences among countries are one of the most important ones. In the early 1990s,
Coopers & Lybrand conducted a study and made an analysis of nearly a hundred
companies that were not performing well in mergers and acquisitions effect. Of which
about eighty percent of the company chief executive officers believed that one of the
main factors which mergers and acquisitions did not achieve the desired effect was the
differences of company's cultural values. According to the study which KPMG's
Global mergers and acquisitions integration business partner, Mr. Jack Prouty, has
done in the famous case of mergers and acquisitions 70/70, about 69 percent of the
mergers and acquisitions failed, even if the successful acquisition of enterprises, of
which there are nearly 80 percent did not achieve the desired results, and that the
corporate culture is difficult to achieve an effective unified in the process of mergers
and acquisitions has become an important factor in limiting the effectiveness of them.
Under the background of global economic integration in-depth development,
some of China's large enterprises are gradually moving towards the world, and
gradually developed to multinational corporation, it is an important way for Chinese
enterprises to explore in the global market and also a kinda full participation in the
global market as a manifestation. At present, the number of enterprises set up by
Chinese enterprises to invest abroad has reached nearly 10,000, of which the amount
of non-financial enterprises to invest abroad has been close to 300 billion, the total
assets of foreign enterprises has reached one trillion. At present, the number of
Chinese enterprise employees overseas is close to more than 100 million people, of
which more than half are the foreigners, these enterprises are located in more than 160
countries around the world, involving various industries. Under the national policies
having been put forward in China, some of its large enterprises have completed the
cross-border mergers and acquisitions, such as, Huawei, Haier and other large
enterprises. Chinese enterprises achieve transnational mergers and acquisitions at a
faster rate, and are also active on the world stage as being an important performance.
Effective communication between enterprises is a key factor to achieve
corporate mergers and acquisitions. According to their actual business situation,
enterprises in the process of cross-border mergers and acquisitions should develop
their reasonable business goals, do a good job of enterprise development planning,
business model and management methods and so on, and combined with the cost of
business investment, carry out the signing of the agreement. After the completion of
the acquisition of companies, a unified corporate culture has become an important
part of the management of mergers and acquisitions. Such as overseas trade unions
and other trade associations will have a greater role in the mergers and acquisitions of
enterprises, and the unity of the values of employees and the corresponding
re-enactment of the labor system. China's cross-border mergers and acquisitions are
still in its infancy, there is no mature experience to follow, especially in ways of
mergers and acquisitions, in process of mergers and acquisitions etc, moreover, the
difference between Chinese and foreign cultures is a key factor restricting the merger
process, in practice there is a big dilemma. This study focuses on the importance of
cultural integration in multinational mergers and acquisitions, and taking China's
current development as the starting point, learns from the experience of foreign
enterprises, provide countermeasures and suggestions for Chinese enterprises to solve
the problem of cultural integration in cross-border mergers and acquisitions.
1.2The purpose of the study
The first part of this study is the general introduction of cross-border
mergers and acquisitions with combing and summarizing the relevant research results
at home and abroad, then combined with the actual situation of China's enterprise
development, taking Haier Group of China's enterprises in Japan's Sanyo Electrical
and Mechanical Group's cross-border mergers and acquisitions as a breakthrough
point, cultural differences and cultural integration methods after the merger between
the two companies are summarized in this study, analyzing its pros and cons, to learn
its lessons, from China's current actual situation, combined with relevant theories, this
study gives an in-depth discussion and analysis on the transnational cultural
integration in the cross-border mergers and acquisitions, and puts forward some
corresponding strategies and suggestions for them.
Chapter 2
Theories of cross-border mergers and acquisitions and literature
review
2.1 The Development Course of Cross - border mergers and acquisitions of
Chinese Enterprises
In the mid-1980s, China’s cross-border mergers and acquisitions began to
develop, up to now, it has been more than twenty years. China's cross-border mergers
and acquisitions first start from the theoretical research, and then gradually move
towards practice, from small scales to larger ones. Although, in recent years,
cross-border mergers and acquisitions occasionally involved in large-scale
multinational enterprises, compared with other western countries, the assets of China's
multinational enterprises is relatively small. Mergers and acquisitions in developed
countries emphasizes mutual cooperation, however, China's mergers and acquisitions
are still in the immature stage, mainly concerning mergers and acquisitions of large
enterprises to small enterprises. A large number of mergers and acquisitions occur
when some overseas enterprises fell into crisis, or just the acquisitions of smaller
enterprises, such as Microsoft's acquisition of Nokia and so on. At present, China's
cross-border mergers and acquisitions don’t have a large scale, however, with the
strength of Chinese enterprises has grown, a large number of mergers and acquisitions
of overseas enterprises will be emerged in the future. The main reasons are the
following:
First, at present, the comprehensive competitiveness of enterprises in China
has reached a very high level, provided with the conditions for cross-border mergers
and acquisitions. In the early 1990s, China's trade has been a surplus of the state,
along with the continuous influx of overseas capital, China's foreign exchange reserve
has reached a considerable scale. Moreover, the savings deposits of Chinese residents
has reached more than 40 trillion, with the development of China's economy, the
strength of Chinese enterprises continue to increase, large-scale enterprises already
have the strength of cross-border mergers and acquisitions. Second, the size of
enterprises and the strength of enterprises are closely related, in order to achieve
cross-border mergers and acquisitions, first and foremost condition is to make their
own growing strength, so as to obtain a dominant position in a competitive market,
and continue to receive a greater share of the international market. Third, the
transnational mergers and acquisitions of Chinese enterprises is mainly based on the
state-owned enterprises and holding enterprises, but with the strength of China's
private enterprises continues to grow, the frequencies of cross-border mergers and
acquisitions will increase, and have a greater impact, such as the famous case of
Dalian Wanda acquiring AMC theater company and so on. The private property rights
in China is clear, the business management models are diversified, and our
government policies continue to give them concessions, under the influence of these
factors, China's private enterprises are further developing and growing, and will
gradually move toward the world, realized in line with the actual development of
cross-border mergers and acquisitions.
2.2 Overview of corporate culture theory
2.2.1 Related concepts of corporate culture and its role
1. The concept of corporate culture
At present, there is no agreement on the exact concept of corporate culture at
home and abroad, we believe that corporate culture is known for some values that can
be recognized by employees, and behavior patterns based on such values. Corporate
culture is divided into four levels: material culture, behavior culture, institutional
culture and spiritual culture, as it shown in Figure 2-1:
Figure 2-1 Corporate culture level chart
2. The basic role of corporate culture
Corporate culture has the following basic role:
First, the guiding role of corporate culture. Corporate culture is the
professional ethics guide of the staff, to guide employees in accordance with the
requirements of the enterprises to carry out the corresponding work; Second, the
cohesive function of corporate culture. Corporate culture is the spiritual pillar of the
company, can make employees have a strong sense of identity, and continuously
enhance the cohesion of the staff, and promote the comprehensive development of
enterprises. Third, the encouraging function of corporate culture. The working
atmosphere which corporate culture creates, and certain incentive measures which it
takes, continuously motivate staff to create a good work performance; Fourth, the
binding effect of corporate culture. Around the rules and regulations established by
corporate culture, on the one hand they are the requests for the staff made by the
enterprise, on the other hand they may achieve employee self-restraint. Fifth, the
radiating function of corporate culture. Corporate culture is the spirit of enterprise, it
can be further spread and improve corporate images.
2. 2. 2 Characteristics of corporate culture
1. Characteristics of culture
Culture possesses the characteristic of differentia, it is also one of the
important criteria to distinguish different kinds of people. Culture has the
characteristics of acquisition, it can spread in the population by means of people
learning and so on. Culture thereby has the characteristics of mass, it is common
values as well as behavior patterns that a certain group of people possess. Only those
values and behavior patterns recognized by the majority of people can be called
culture. Culture has the characteristics of the binding effect. What behavior patterns
and values formed in culture make people consciously receive some behavior patterns
or the corresponding behaviors in accordance with the standards. Culture has the
characteristic of differentia. Differences in environment lead to cultural differences.
This factor in the embodiment of the cross-border mergers and acquisitions is very
obvious, cultural differences have become one of the major obstacles to mergers and
acquisitions.
2. Characteristics of corporate culture
According to the investigation and study for the world's top 500 enterprises,
good corporate cultures play an important role in the survival and development of
enterprises. Most of them are taking customers as the starting point, giving employees
the equal rights for development in the enterprises, and constantly strengthen the team
building of enterprises. Enterprises with a good moral and cultural will be based on
market demand, increase the protection for employees' interests, enhance the ability of
value creation and follow the development trend of the times.
2. 3 An overview of corporate culture integration
2.3.1 The concept of corporate culture integration
The management integration in the mergers and acquisitions mainly refers to
the four aspects of business assets, human resources, organizational strategy as well as
corporate culture integration. In addition to corporate culture integration, the
remaining three can be reflected in the form of investment. However, that cultural
integration just relies on investment is not enough. China's well-known scholar Fan
Shusheng mentioned that cultural integration is also a variety of cultural absorption，
and hereby form a dominant culture, which is a more complex and dynamic process
of development, not only concerning corporate assets, but also the integration of the
spirit of enterprise value. Therefore, we must actively build corporate culture, develop
in line with the actual development of enterprises cultural values, constantly create a
good atmosphere, and promote the development of enterprises.
These views have their place in common: first, the corporate culture relies
on communication and exchange between employees; second, cultural integration is a
process of mutual influence, complementing each other and learning from each other.
It is also the process of cultural integration, cross-border mergers and acquisitions is
the process of cultural normalization. Integration of corporate culture can be summed
up as constant exchanges among relevant corporate cultures, and finally establishes a
new cultural behavior patterns and forms a sound internal corporate culture system by
means of a variety of cultural selective absorption.
2.3.2 The meaning of cultural integration of transnational mergers and
acquisitions
Cross-border mergers and acquisitions include two different enterprises in
two different countries, so the existence of corporate culture conflict and ethnic
conflict is inevitable, and culture is constantly evolving in differences, accordingly,
the differences between cultures do not affect the development of multinational
enterprises, on the contrary cultures in the conflict learn from each other, and continue
to develop, and ultimately build a new cultural model and form a new cultural
atmosphere. All employees in this new enterprise culture will form a relatively
consistent value and eliminate barriers caused by cultural differences, thus contribute
to the growing strength of multinational corporations on the world stage.
Cultural integration essentially refers to the process of culture reconstruction
made by acquiring country and acquired country, after continuous reconstructing, the
cultures of all nationalities can be recognized by employees, thus the company's
diverse cultural system can be constructed, and the comprehensive competitiveness of
enterprises can be enhanced in more in-depth level. When the merger is not expected
to achieve the desired effect, cultural conflict is generally considered as an important
reason for the failure. However, cultural diversity may form obstacles, but also can
bring the mutual absorption of the culture, promote different cultures to learn from
each other and to achieve the common development of their own cultures. That
mergers and acquisitions did not achieve the desired effect is mainly due to the lack of
sound cultural diversity of integration measures and a strong team of management
staff. Whether the integration of corporate culture hinders or promotes the
development of enterprises, in short, cross-cultural integration can have a greater
impact on the effectiveness of mergers and acquisitions.
2.3.3 Necessity of enterprise culture integration in cross-border mergers and
acquisitions
Cross-border mergers and acquisitions is initially the transfer of ownership
of enterprises, although only formal control can be achieved in this kind of transfer, in
order to achieve the control of enterprises, only obtaining the ownership is not enough,
in order to achieve the real control of enterprises, it also depends on a strong corporate
culture as a margin of pillar to promote the development of enterprises. The
integration of corporate culture is the key to the success of mergers and acquisitions, a
large number of business cases without ideal mergers and acquisitions are the best
witnesses. If employees work in enterprises that have two different values and
behavior patterns, there is bound to be an incongruity of work. In the long run, it is
easy for the enterprises to form gangs and difficult to form a unified decision-making,
and thus promotes the performance of enterprises declining, or even worse than the
performance before mergers and acquisitions. The solution of these problems depends
on the effective integration of corporate culture and the formation of a unified cultural
values and behavior patterns.
Kenny consulting firm found in the investigation, in the past, close to 75%
of the acquisitions did not achieve the desired results, even those enterprises which
have made successful acquisitions, only 35 percent of them have achieved the
expected profits. After in-depth study, the reason for its failure is mainly because the
two companies did not achieve effective integration of culture after mergers and
acquisitions. In other words, due to the multi-cultural nature, it is difficult for the
acquired business to be integrated into the cultural value system of the acquiring
business. Although the transfer of the ownership of enterprises is achieved, but the
effective integration of culture can not be really achieved, and thus the substantive
control of the enterprises can not be achieved. In this regard, Peter • Drucker believes
that multinational mergers and acquisitions are not just the transfer of corporate assets,
identity of corporate culture value system and improvement of corporate performance,
can be regarded as successful mergers and acquisitions, on the contrary, it was a
failure of mergers and acquisitions.
Cross-border mergers and acquisitions not only pay attention to the existing
ability to create value of the acquired company, and pay attention to the overall level
of value creation after mergers and acquisitions. To achieve the profitability after
mergers and acquisitions is far beyond the ability of prior acquisitions. After the
acquisition, the aim is not only to achieve the increase in assets, but also to enhance
the integrated management of enterprises after the merger, through more sound
management and continuous reduction of costs, thereby enhancing their competitive
strength. Cultural integration is to achieve mutual absorption between cultures, to
learn from each other, to make more optimal allocation of corporate resources, to
enhance the inherent strength of enterprises after the merger, and to enhance the
comprehensive competitiveness of enterprises after the completion of mergers and
acquisitions.
2. 4 Types and advantages of cross-border mergers and acquisitions
2.4.1 Types of cross-border mergers and acquisitions
Cross-border mergers and acquisitions can have a variety of classification
models, we mainly introduce the following two categories: first, horizontal
cross-border mergers and acquisitions, vertical cross-border mergers and acquisitions
and mixed cross-border mergers and acquisitions. This classification is based on the
major divisions of industry. Horizontal mergers and acquisitions refer to the
transnational mergers and acquisitions of same industry enterprises, they aim at
gaining more market share, or have more sources of sales and get richer amount of
management experience in order to achieve the integration of resources, and even
some enterprises aim at gaining greater spaces for development, thus forming a
monopoly. It is easier to achieve the integration of resources for horizontal mergers
and acquisitions, mainly due to the acquiring companies and the acquired companies
having greater industry similarities. Therefore, a large number of enterprises often use
this approach. Vertical mergers and acquisitions are mainly used in the production of
similar products. This approach is mainly to obtain more raw material supply
channels and more sources of sales, and further enhance their competitive strength. In
the process of mergers and acquisitions, mergers and acquisitions occur mainly
among raw material supply-oriented enterprises and product demand-oriented
enterprises, production and management for such enterprises are relatively clear, after
the completion of the merger, they can be more easily integrated. Mixed mergers and
acquisitions can achieve the optimal adjustment of corporate strategy and the
enterprise risk prevention from various aspects, and to enhance the profitability of
enterprises, however, this approach is relatively less used. Second, direct and indirect
mergers and acquisitions. This division is mainly based on whether the merger parties
communicate with each other directly. Direct mergers and acquisitions refer to the
direct purchase of the ownership of overseas enterprises with poor management or
financial difficulties. In contrast, indirect mergers and acquisitions mainly refer to the
purchase of securities in the securities market, by controlling stake in the acquired
company to achieve mergers and acquisitions.
2.4.2 Advantages of cross-border mergers and acquisitions
Cross-border mergers and acquisitions mainly have the following
advantages: First, gaining market share in high efficiency. Many companies in order
to obtain more sales channels, need to increase their own share in the international
market constantly, however, the different trade policies and the existence of trade
barriers have increased the business cost for the international sales market. Many
enterprises are facing difficulties when entering the foreign market, whereby the way
of product output is not feasible. Another way is to establish a direct factory in a
foreign country, in this way it will take a higher construction costs, and construction
approval process is complex and slow. In such circumstances, companies through
mergers and acquisitions can quickly go to the world. Opening up sales channels can
not only reduce costs but also achieve product output. Second, achieving efficient
allocation of resources in the acquired company. The overseas acquired enterprises
generally have their own resources, their existing sales channels, product trademarks
and equipment can be used again. The acquired enterprises also have their original
production chain, human resources and market share, etc. The use of these
ready-made resources, can reduce the adverse impact on countries' trade policies, can
put into production and operation efficiently and reduce transaction costs, and many
other. And then continue to receive price advantages and enhance their market
competitiveness. Third, bringing the advantages of external financing. In order to
obtain long-term development, enterprises must have a strong financing capability.
And after the acquisition corporate financing channels can be with a wide range of
sources, so enterprises can be easier to finance, such as asset collateral, selling shares
and stocks and so on. Enterprises usually take these three ways to reduce costs, access
to shares of the merged companies: first, if the acquired company is in the production
of poor management, its stock price tends to be given a lower assessment, instead,
mergers and acquisitions companies should be able to do a proper assessment of its
stock price, and thus be able to access the company's stock at a lower cost. Second,
under poor conditions of production and operation, shares of the acquired company
can be purchased directly at a lower price by the acquiring company. Third, under the
situations of the acquired company due to various reasons leading to the decline in
corporate performance, and thus stock prices crash, the acquiring company can take
the opportunity to buy their shares. Trade barriers can also be effectively
circumvented by the acquiring company，with products at lower prices, the acquiring
company can quickly capture the market, continue to reduce barriers to business
development and the risks faced, so as to effectively grasp the market supply and
demand, and then adjust the operating principles, and continuously enhance the
comprehensive competitiveness of enterprises in order to obtain sustainable
development.
2.5 Research status quo at home and abroad
2.5.1 Research status abroad
Mergers and acquisitions consist of two parts, namely, mergers and
acquisitions of domestic enterprises and multinational mergers and acquisitions. Most
research is to start from domestic mergers and acquisitions, and then gradually transits
to multinational mergers and acquisitions. At present, domestic mergers and
acquisitions research tends to mature, but the scope of the study is mainly on the
integration of corporate culture. Based on previous research methods and research
thinking modes, enterprises have realized the adjustment of forms of corporate capital
structure, however, the right to operate control involves many aspects, including
employees, and enterprise management system and corporate culture, etc. Accordingly,
corporate culture and corporate management concepts in the development and
operation of enterprises play an important role, relating to the normal operation of
enterprises. Therefore, in order to achieve the desired results of mergers and
acquisitions, enterprises must strengthen the integration of corporate culture.
Cultural adaptation proposed by well-known scholar Berry, is the integration
of corporate culture for its essence, can be divided into four modes, namely,
integration, absorption, segmentation and chaos. Singh, a well-known scholar,
combines the culture of the nation with the corporate culture，a large number of
scholars have also given a positive feedback, opinions of these scholars are mainly
that national culture should also be divided into four stages: they are respectively
sensory differences, exaggerating differences, typification and repression. Baker, Watt
and Mellie more emphasis on the role of enterprise mergers and acquisitions
generated by the original corporate culture, their views and the views of Wasserstein’s
were similar. Wasserstein considered that the integration of mergers and acquisitions
when the merger is completed, and the innovative ability of the acquired companies,
has a significant impact on the expected results of enterprises mergers and
acquisitions. Finkelstein believes that corporate mergers and acquisitions can be
achieved, the two must be complementary, once the optimized integration can be
achieved and the competitiveness of enterprises can be constantly enhanced.
2.5.2 Current domestic research
In the 1980s, Chinese scholars began to carry out in-depth study of corporate
mergers and acquisitions, and continue to apply to the actual work. In 1990, China's
leading scholar Zhang and Zhang Yi initially carried out a more in-depth study on the
cultural differences in the phenomenon of mergers and acquisitions, this study
suggested that cultural differences in mergers and acquisitions were the reflection of
contradictions among enterprises, only if the culture of mergers and acquisitions can
be merged, its expected results can be achieved. Hu Yongzuo also carried out an
in-depth research on the cultural difference which existed in the corporate mergers
and acquisitions, he believed that a process is needed for the acquired businesses to
adapt to the newly formed corporate culture, in order that employees can gradually
integrate into a new working environment. Chen Hao, Wang Yong believed that the
means of mergers and acquisitions is one of the important ways to accelerate the
development of enterprises, however, after the acquisitions, enterprises should focus
on the integration of corporate culture differences. Liao Bing also believed that after
the acquisition of enterprises, the elimination of cultural differences would take a long
time. It mainly related to corporate culture values, business philosophy and so on. And
effective programs were needed to make for the elimination of these differences. At
the moment, there are not any studies which can clearly suggest viable solutions.
Chapter 3
Research Design
3.1 Research Framework
In this paper, the relevant theories and literature reviews will be firstly dealt
with, and then the status quo and characteristics of cross-border mergers and
acquisitions of Chinese enterprises, cultural differences and cultural integration
problems in cross-border mergers and acquisitions and so on, will be analyzed
respectively from the national and organizational level, and then make assumptions
for the case, deepen the cognitive of cultural differences and cultural integration in the
internal enterprises after the acquisition through the questionnaire. Finally, by the
above arguments, the conclusions will be discussed and sorted out，and strategies and
suggestions on the corporate culture integration of the case companies will be put
forward, through the analysis of both government and enterprise, specific operation of
the program for the corporate culture integration in the cross-border mergers and
acquisitions will be given finally, providing references for the cultural differences and
strategies of multinational mergers and acquisitions in the future.
Figure 3-1 Research flow chart
3.2 Research methods
In this study, case analysis is used as a research method, an individual case
and a single unit of analysis will be taken in this case study, and methods of literature
collection and questionnaire survey are about to be used as research tools.
3.2.1 Method of literature collection
Method of literature collection is a method of collecting and analyzing
research data to obtain intelligence information, mainly to collect information through
libraries, institutions, domestic and international information network. This kind of
collection method requires a document retrieval capability, as well as the
establishment of search strategies, computer operation and the use of search tools, etc.
Literature data collection can be carried out through the following channels:
(1) Purchasing. Including the purchase, mail order, procurement service and
ordering and so on for the required documents and materials.
(2) Exchange. The exchange of literature is the main way to gather
intelligence. Since most of the information required by enterprises belong to the
internal communication or restricted circulation of publications, therefore, only
through the exchange of each other's economic and technical information, relevant
information required can be achieved.
(3) Asking. Direct communication or contact to obtain the relevant
information is also an effective way to collect information. Especially for some
particular business intelligences of some products, manufacturers will be willing to
give them away free of charge.
(4) Copying. It is a kind of conventional way to make full use of the limited
literature. Especially for those who collect a small amount of information and
intelligence related, replication is very effective.
3.2.2 Questionnaire survey
Questionnaire survey, also called questionnaires, is a survey method in
which investigators use a uniformly designed questionnaire to obtain information or
solicit opinions from selected respondents.
Questionnaire survey usually has the following characteristics:
（1）Questionnaire survey is a kind of standardized survey, which was
conducted on a structured questionnaire with a unified structure.
（ 2）Questionnaires are usually conducted through indirect surveys,
investigators and respondents do not meet directly, the questionnaires are filled in by
the respondents.
（3）Questionnaire survey is generally a kind of written investigation.
Written questions were asked by the investigator, and written answers will be given
by the respondents as well.
（4）Questionnaire survey is generally a kind of sample survey, the
respondents are selected by sampling, and the number of respondents are generally
big.
（5）Questionnaire survey is generally a kind of quantitative survey, and the
population is inferred from the sample statistics.
According to the differences of respondents, questionnaires can be divided
into self-administered questionnaire and surrogate questionnaire. Among them, the
self-administered questionnaires, according to different modes of delivery, can be
divided into press questionnaire, postal survey and delivery questionnaire survey;
surrogate questionnaire, according to different chat modes, can be divided into access
questionnaire and telephone survey.
This study adopts the way of delivery questionnaire survey, questionnaires
will be sent to the specified survey respondents, questionnaires will be collected after
the completion of the respondents.
3.3 Research subjects
Initially, this study will first discuss the national culture and organizational
culture.
In cross-border mergers and acquisitions, in addition to the cultures of
different countries, there are still two different internal corporate cultures, therefore,
after the multinational mergers and acquisitions, cultural integration between the two
companies is very important. This study will first explore the differences between
national culture and organizational culture between the two companies.
Secondly, this study will analyze the cultural conflicts between the two
enterprises after the merger.
In the case selected in this study, the two companies are belonging to the
same appliance industry, regardless of the failure or success of the acquisition, it is
also meaningful to explore the impact of its cultural conflicts. In mergers and
acquisitions, the most critical part is the post-merger integration, cultural integration
is an important factor which can not be ignored, therefore, this study will analyze and
compare cases leading profile and cultural differences between the two companies.
Chapter 4
Case Study - A Case Study of Haier Group's acquisition of Sanyo
Electric
4.1 An analysis of the status and characteristics of Chinese enterprises'
multinational merger
Despite the current global economy has slow pace of development, and other
factors were continuously exposed such as the debt crisis in Europe and the instability
of Middle East, the enthusiasm of China's major multinational companies for mergers
and acquisitions of overseas companies has always been the same. For example,
CNOOC acquired the Canadian Nexon Group for 15 billion yuan, has become China's
current largest overseas corporate acquisition. Wanda Group completed the
acquisition of AMC Cinema at a cost of $ 2.6 billion, also marks the cross-border
mergers and acquisitions of Chinese enterprises transforming from the traditional
industry gradually to other industries.
Cross-border mergers and acquisitions is the best shortcut to quickly open
the international market, they can quickly and successfully accept the business
channels, material purchase channels, sales channels, brand, product manufacturing
methods of the acquired company's favored by the domestic large companies deeply.
Because not only they can quickly own the desired products, process technologies and
market shares, but also can be faster and easier access to financing to grow their own
than the past "green financing", and reduce the cost of developing new areas of
business, marketing, and business channels required at the maximum extent. Chinese
enterprises are usually based on overseas trade to expand market shares or corporate
mergers and acquisitions to achieve the goal of internationalization. In the past, many
companies used the first way, it’s not only time-consuming, but costing much larger,
the results were unsatisfactory. And later they found that many domestic and foreign
enterprises through mergers and acquisitions can quickly get sales channels, consumer
groups, market shares, etc., and therefore gradually began mergers and acquisitions
tide. When the company developed to a certain extent, wanting to expand overseas
markets, mergers and acquisitions will be used to quickly open up the overseas
international roads. They can be more easily accepted by consumer groups in sales
places, and obtain the desired technology and brand, also nurture the original
corporation.
However, cross-border mergers and acquisitions have not been easy, often
there are many uncertain risk factors. First, the transaction information and status of
the two parties are not equal, what acquirers tend to see is the acquiree's market shares,
sales and purchase channels, for where there are potential problems are often
overlooked, but after completing the acquisition, the purchaser just will clearly know
what the business problems and risks exist, it is likely to bring a serious risk of the
purchaser, or even hinder the development of the parent company. Second, it’s
concerning regional differences arising from cultural differences, which is the
problem most needed to be solved by the enterprise after completing the acquisition.
Because many foreign companies have voluntary trade union organizations of their
own, they usually ask for the enterprise to increase wages and benefits and other
requirements, if they can not be met, there will be strikes, protests and other
obstructive behaviors to the production and operation of enterprises to achieve their
goals, the local will protect this "reasonable" behavior, thereby allowing enterprises to
suffer losses, especially in Europe and other developed countries.
Although Chinese enterprises’ overseas mergers and acquisitions are on the
rise, the acquisition index is far below the global average, mergers and acquisitions
are at the initial level. Although the acquisition index is low, this kind of behaviors
still has a positive role in promoting the internationalization of China's enterprises.
They pointed out the direction for other companies and provided successful
experience, so that enterprises do not need to open up foreign trade through direct
access to target overseas markets, and they can have more pricing power and more
rights of speech in international trade, to promote their continuous development.
4.2 An analysis of cultural differences in cross - border mergers and acquisitions
4.2.1 An analysis of cultural differences between China and Japan
1. Differences brought about by history and culture
In the long historical activities of mankind, the culture gradually emerged,
which is based on the communication and connection between people, and then
cultural objects such as artifacts, words, customs and so on produced. The local ethnic
groups, customs, character, habits, and corporate culture are closely linked, directly
affect the corporate culture, regional cultural differences is largely derived from
differences of the characters, customs, habits and other aspects, moreover it is also
very different in people's thinking and understanding, which is common in every
nation. As countries have many differences in geography, customs, habits, and
therefore the corporate culture is not the same.
Chinese Culture Originated from the Exploration of Man and Nature, but
there are multiple cultural centers of origin, and formed a culture of a surname as a
link and blood ties as a clan in the course of development, this is a very unique culture
in the world, advocating morality and emotion. Chinese people pay more attention to
the hierarchical relationship between people, feudal social impact has long been to a
great extent influenced on people's thinking.
Japan is also deeply influenced by Confucian culture, due to the hierarchical
relationship is of high value, leading to the status of which its supervisor is often high
above, employees also tend to obey instructions, accustomed to working in the
command in charge to avoid conflicts with supervisors.
From the geographical point of view, Japan is an island, it is mountainous
and lack of arable land and natural resources with frequent earthquakes, its unique
geographical environment has nurtured the Japanese unique way of thinking, the
formation of personality traits of their hard work, patience, and being more
accustomed to rely on the Group's development. But China is the opposite, since the
broad and fertile land, coastal people are mostly based on farming for survival source,
forming a unique land culture, the long-standing small-scale peasant economic
thought and the unified national culture gradually produced the special culture with
the kinship as the main social connection, Chinese people are also more biased in
favor of personal heroism.
2. Chinese directness and Japanese avoidance
Chinese people pay attention to the relationship between each other,
advocating morality and personal accomplishment, by the impact and influence of
Western culture in modern times, good ideological qualities such as people-oriented,
honest, hard work and so on are advocated. When in contact with others, Chinese
people usually show their strong social skills up, are good at the debate, sometimes
going red in the face for a point of contention. Japanese rarely argue, they are afraid
of the deterioration of relationships, it belongs to one of those countries to avoid the
uncertainty, comparatively tending to avoid competition and have a certain degree of
rejection for adventures and changes. Unclear rules and regulations for the staff, there
will be the case of the occurrence of anxiety.
3. Analysis on the negative and irrational aspects of the culture for the two
parties
The formation of national culture is a long process of development by the
constant innovation and the gradual absorption of new things, it has a great relevance
with the ruling class and the habits people have. Take Chinese culture as an example，
in the long-term development process, people pay more attention to agricultural
development and disregard for commercial, therefore, the level of agricultural
development has been a world leader, but the development and reform of social
productive forces has created a significant negative impact. In thinking more
emphasis is put on subjective thinking, while ignoring the objective existence. One of
the typical representatives is Wang Yangming's theory of "to investigate things is to
attain knowledge” and heart-mind theory, strict grade-guarded levels make people do
their own things step by step, limiting people's innovative thinking.
Japan belongs to the male-dominated countries, pay more attention to the
needs of substance, that concepts of men having more power and status than women
deeply rooted in their minds, so with such strong social stereotypes in the community,
it is easier that men and women have been treated differently at work, generally
speaking there are more social expectations for men, due to the difference in social
status between men and women in the Japanese companies, it’s more difficult for
women to be promoted at work, compared with women, men have more opportunities
in the workplace.
4.2.2 Corporate cultural differences in cross-border mergers and acquisitions
Multinational mergers and acquisitions and domestic mergers and
acquisitions are very different， comparatively speaking domestic mergers and
acquisitions in general can quickly integrate and operate after the completion of the
acquisition, because there are cultural differences which are difficult to resolve in
multinational mergers and acquisitions, it relates to the differences between the two
peoples' ideas, concepts and customs and so on, some regional differences are so large
that it takes a long time to put into operation in the run after the completion of the
acquisition. Therefore, the problem how to rationally and effectively solve the cultural
differences of mergers and acquisitions in different industries and regions is that many
enterprises need to consider and urgently need to solve.
For a description of corporate culture, corporate culture is divided into three
levels of national, dominant and recessive, national cultural influence is the most
extensive and aggressive, especially the different levels of exchange between nations
will produce a corresponding cultural influence. If there is no greater social or
political change in a country, then their cultural identity will not greatly change.
National culture will have a far-reaching and lasting impact on corporate culture, each
time the introduction of new policies or policy changes will bring a great impact to
the enterprise, the corporate culture will have a subtle impact on all employees, but
will not affect the national culture, the recessive level corporate culture refers to the
cognitive and attitude which the employees treat the enterprises, while the dominant
level corporate culture is the daily manifested cultural beliefs and practices under the
guidance of the behaviors, they are interactive.
Figure 4-1 Diagram for three Levels of corporate culture
The level of economic development and the course of cultural development
between nations will make them have some cultural differences, well-known scholars
Singh and Gutte Singh believe that cultural differences between countries as a
concrete manifestation of the two countries presented as different cultural norms and
behaviors. Culture conflicts after multinational merger actually refer to the existence
of large differences between the two cultures, this is in the part of the kernel
management.
Enterprises are affected by the local history and culture, customs, as well as
the size of enterprises, and other aspects of development. These different aspects
between the various enterprises, therefore, lead to cultural differences between
enterprises. From the perspective of the implicit kernel, the reason for this difference
is the concepts of each enterprise and its employees are very different, the specific
performance presents as the operator character, investment risk appetite, management
behavior and employee attitudes. Through the analysis of multiple corporate mergers
and acquisitions, you can find there is not a small difference in these areas, therefore,
the effective management of the foreign enterprises after mergers and acquisitions
cause some obstacles. From the dominant point of view, domestic and foreign
enterprises are mainly differences in management methods, Chinese attaches great
importance to the relationship between people and stresses human relations, take
Japan and Germany for example, they are more results-oriented and more focused on
the refinement of management, striving for perfection.
Table 4-1 Main differences between corporate cultures
1 Leadership style 7 Marketing strategy
2 CEO's personality 8 Organizational performance
assessment methods 3 Management decision-making
process 9 health care system
4 Communication and
dissemination of style
1
0 Reward and promotion mode
5 Compensation system 1
1
Individual performance
assessment methods 6 Retirement system 1
2
Employee career development
plan
Source of data: 黄伟东，琳敦.文化整合从并购前开始[J].中国企业家，
2005(3-4；)，P123
In general, the dominant difference is less difficult to solve, you can still run
a conventional style of management to effectively solve this problem, the implicit
aspects are difficult to solve, and to solve the problems of the dominant difference is
usually the first step to solve the problem. For example executives demonstration
model, improve the welfare of enterprises before and so on, through a series of
measures requiring a relatively long process to reduce the kernel conflicts, the new
corporate values can be input to the awareness of employees. But the conflicts of
political and national levels which can not be changed, you can only adapt to this
national culture, absorb the relatively good parts, give full play to the enthusiasm of
the staff.
4.3 An analysis of the problems in the cultural integration of cross - border
mergers and acquisitions in Chinese enterprises
4.3.1 Problems on the integration of Chinese enterprises in human resources
China's enterprises in the integration of human resources as a whole are still
in its infancy, not perfect, but talent is the main body of society, is the communicator
of culture. And people are also very important objects to cultural integration. For
enterprise mergers and acquisitions, big personnel changes are difficult for employees
to accept, so trying to keep the original enterprise employee management system and
management methods makes employees have a certain sense of security.
4.3.2 Problems on corporate culture difference between countries
China's corporate culture are mostly determined by the supreme leader, most
did not hire professional management personnel or team to carry out the systematic
construction of its corporate culture. Generally speaking, the levels of corporate staff,
functions, divisions of labor of China's enterprise are not clear enough, more often the
management and work arrangements are achieved through the superiors assigning
tasks to the subordinates. But in developed countries, the role of middle-level
leadership is even greater, the overall impact on the role of corporate management is
more direct. In some multinational companies, it’s not possible for middle-rank
managers being a national spokesperson image to give those decision-making and
management contrary to their culture. In the process of mergers and acquisitions, if
the Chinese enterprises adopt their own management style, they may cause regulatory
barriers and are not conducive to the management and development of enterprises.
That is the importance of multiculture in multinational mergers and acquisitions,
which is the key factor to determine its success or failure.
4.3.3 Problems on cross - cultural integration management capability of Chinese
enterprises
With the continuous development of economic integration, changes in the
world situation are gradually accelerating, the cultures of individual countries and
organizations are also increasingly diverse. It needs all kinds of talents to organize
production and management for the globalization of the world's enterprises, and needs
relevant management personnel who are familiar with various culture and mergers
and acquisitions business to help enterprises to manage and get the culture integrated.
Lenovo and TCL Group, represented by the two Chinese companies, push overseas
mergers and acquisitions cultural integration into a higher and more important
position.
For most international enterprises concerned, since employees come from all
over the world, with different cultures and habits, mutual collision and friction are
inevitable. Due to the differences of values and pursuits for employees, companies
should differ in management. Overseas companies should comply with the values of
social construction requirements, make the products meet the needs of most
consumers. If it is difficult to adapt to the cultural practices of the host country or
community for the acquiring enterprises, it will further hinder the development of
enterprises. Chinese enterprises are still in the realization of the initial stage of the
country, there is no rich experience and strong comprehensive strength of overseas
mergers and acquisitions, and there are few cases to learn from. Due to Chinese
enterprises greatly influenced by politics and policy, lacking of talent and being
anxious lead to their difficulties to compete in advanced countries and enterprises.
4.3.4 Problems on the degree of Chinese enterprise culture identity
After the reform and opening up, Chinese enterprises have achieved rapid
development, however, most enterprises also belong to labor-intensive ones, less
high-tech types. It is difficult to change the impressions of Chinese enterprises in
foreign markets on the low product prices and poor qualities. Therefore, in the process
of mergers and acquisitions, the identity of employees for products and values is very
important. There are still some foreign people and the media that have prejudice and
suspicion of Chinese enterprises, so that investors worry about the return of Chinese
enterprises, employees worry about work, managers worry about development, which
increased the difficulty of mergers and acquisitions of Chinese enterprises, and the
difficulty of management after the merger. Referring to the previous mergers and
acquisitions case, the corporate culture and brand of the acquired company are highly
recognized by local consumers and employees. In this environment, the recognition of
employees is the key to the realization of corporate mergers and acquisitions. That
Chinese culture is imposed on the acquired companies is not able to achieve the
integration of enterprise, it can only cause resentment of employees, leading to strikes,
resignations and other negative things happening. Take TCL as an example, after the
acquisition of Thomson, Thomson does not accept TCL's low-cost design, resulting in
a wave of large numbers of employees resigned in 2004, this is not just because of
cultural differences, but also the welfare and placement of workers and other reasons.
This trend led to TCL in a very unfavorable position, more similar cases such as the
case of Lenovo acquiring CIFA and so on. For now, it has become the key to the
success of mergers and acquisitions that employees can agree with the concepts and
products of enterprises’. Compared with the Western developed countries, it is more
difficult for Chinese enterprises to achieve cultural integration.
4.4 Multifactor analysis of cross - cultural integration of Chinese
All things exist in the universal link and the law of development, the internal
elements of things indifferent development stages are interrelated and interacted,
influenced and restricted each other. For a thing, its internal factors and related
elements and things are called factors, this relationship is called the impact. On this
basis, the factor analysis method is proposed to analyze the problem. This analysis
refers to the analysis of the factors that affect things, the degree of influence, the
interaction of various factors, and proposes the ways to change things by changing the
factors to change the way things develop based on results of the analysis.
Generally the key factors affecting the success of cross-border mergers and
acquisitions have the following four: Cultural differences, human resource
management, low degree of recognition, lack of cultural management. Now construct
the multi-factor model, and carry on the modeling analysis:
prob = a1x1+ a2x2 + a3x3 + a4x4 + s (1)
Wherein, P represents the probability of success, the cultural difference
factor is X, the human resource management factor is x3, the cultural identity factor is
a2, the cultural management factor is x4, the residual term is S, the range of the four
factors is -1,0,1, -1 means no effect, 0 represents uncertainty, 1 represents influential.
Through empirical analysis the following can be obtained:
prob = 0.46x, +0.12x, +0.14x3 +0.28x4 (2)
Through analysis we can see, according to the degree of influence on the
success rate of mergers and acquisitions, the sort respectively is: Cultural differences,
lack of cultural management, human resources management and a low degree of
recognition, in which cultural management factors and cultural differences account for
74% of the success of mergers and acquisitions. Cultural differences are objective
factors that are difficult to change, but we can change the culture of management to
improve the success rate of mergers and acquisitions. Cultural identity is not a major
factor, thus, by a comprehensive analysis, it can enhance the success rate of mergers
and acquisitions to enhance corporate culture management while carrying out
cross-border mergers and acquisitions.
4.5 Cultural integration of transnational mergers and acquisitions of Haier
Group
October 2011 No. 18 Haier Group signed an agreement with Sanyo Electric,
the agreement provides Haier Group wholly-owned Sanyo Group's acquisition of
washing machines and refrigerators business, Haier Group gained sales resources and
channels of Sanyo Electric in other countries, the agreement stipulates that the above
matters will be completed in March 2012.
4.5.1 Company profile
About Haier, Haier is a Chinese home appliance business-oriented enterprise,
founded in the late eighties of the last century, it is one of the first batch of the world's
top 500 enterprises, the development of the brand has gone through four stages before
and after, namely the stage of brand strategy, diversified development strategy stage,
the stage of international strategy and global brand strategy stage. Haier culture great
emphasis on product innovation and personnel training, its core idea is to create value
for customers with a steady stream of high-end products, this set of values is Haier
continuous progress of the most fundamental driving force.
About Sanyo Electric, Sanyo Electric is a subsidiary of Matsushita Group,
its main business is the energy products such as solar power generation systems and
rechargeable battery lights, however, due to limited profitability, since 2009 the
company has been at a loss, so the company had been considering acquisitions.
4.5.2 An analysis of reasons in mergers and acquisitions
In addition, after the acquisition, Haier also received intangible capital that
Sanyo Electric long experience accumulated down, and technology and credit, etc. As
Mr. Du Jingguo said at the signing ceremony of the acquisition: "The secret to the
success of mergers is not how much money and resources can be invested, but rather
in well absorbing the merged firm's corporate culture and entrepreneurial spirit after
the mergers and acquisitions, Haier hope that more than 3,000 employees of the
original Sanyo Electric can be very well integrated into their own business after the
merger."
4.5.3 An analysis of cultural differences among enterprises
Mergers and acquisitions will be faced with conflicts from all sides. That the
major cultural differences exist in the case of Haier acquiring Sanyo Electric are the
following points:
1. Cultural differences between China and Japan
The cultural differences between China and Japan are mainly manifested in
the following aspects: First, different diet culture caused by different living habits;
second, different dress culture in different climatic conditions; third, different beliefs
caused by different history and culture; fourth, different interpersonal culture caused
by work habits. As a Chinese enterprise, Haier is deeply influenced by traditional
culture, such as Haier spirit - "dedicated to the country, the pursuit of excellence",
Haier style "rapid response, immediate action", OEC management model. While
Japan's Sanyo Co., Ltd, on behalf of the Japanese business culture, dutiful and binding
social networks weakened and difficult to understand.
2. Cultural differences among employees
Japanese are concerned about what others think, the principles of handling
interpersonal relations among colleagues and the principles of handling family
relations are very similar. For example, if the Japanese want to express something,
usually they don’t say it directly, tend to use subtle expressions of euphemism, pay
more attention to each other's feelings, won’t destroy the harmonious relationship
between colleagues for something, employees of Sanyo Electric keep this kind of
Japanese tradition at work. The corporate culture of Haier is straightforward, they
speak their mind even in the face of their leadership, everything for the interests of the
company, in comparison, they are not so paying attention to emotional
communication among colleagues. As a result, staff culture between the two
enterprises there exists a certain amount of frictions and conflicts.
In addition, attitudes of managers and staff to mergers and acquisitions are
also different. In the event of this acquisition, Haier Group is the acquiring party,
while Sanyo is the acquired party, if the upper leadership can not handle their
mentality well in this acquisition, then subordinate employees are also likely to be
affected by this atmosphere, it will hinder the integration of employees in the new
company.
4.6 Assumptions on integration of corporate culture and verification survey
4.6.1 Make assumptions
For the case of Haier Group acquiring Sanyo Electric, make the following
assumptions:
Assumption one, the original employees of Sanyo can gradually adapt to the
new corporate culture after the acquisition within two years;
Assumption two, the biggest problem faced by Haier Group after the
acquisition of Sanyo Electric in the process of cultural integration is the cultural
differences brought about from different countries between China and Japan;
Assumption three, the biggest difference between Haier and Sanyo Electric
in the corporate culture is the way of treatment.
4.6.2 Questionnaire design
For the above three hypotheses, design the questionnaire, there are the
following three major issues:
First, after the acquisition of Sanyo Electric Company, do you think if
cultures of Sanyo Electric can be well integrated into the Haier Group within two
years?
Second, what do you think is the biggest challenge to cultural integration
after the acquisition?
Third, what do you think is the biggest difference in corporate culture
between the two parties?
4.6.3 Statistics and analysis of questionnaire results
In response to these three major issues, a total of 120 questionnaires were
distributed, including 50 employees of Sanyo transferred into Haier Group, 10
managers of Sanyo Electric transferred into Haier Group, the original 50 employees
of Haier Group and 10 managers of Haier Group, 100 valid questionnaires were
returned, the effective recovery rate of the questionnaire was 83.33%, the results of
the questionnaire are shown in Table 4-1, Table 4-2 and Table 4-3.
Table 4-1 Statistical tables of survey results on integration of corporate
culture
S
anyo
employees
S
anyo
executives
Haier
employees
Haier
executives
Number of people
who think that it is possible
3
5
3 40 4
Number of people
who think it is not possible
1
0
2 5 1
Percentage of the
number of people who think
that it is possible
7
7.78%
6
0%
88.8
9%
80%
As can be seen from Table 4-1, that the number of people who think Sanyo
employees can well integrate into the culture of Haier Group accounted for 77.78%，
60% of Sanyo executives think they can be better integrated into the Haier Group's
culture; the number of people in Haier Group who believes Sanyo can well be
integrated into the culture of Haier Group within two years is obviously more than
those from Sanyo, of which Haier employees accounted for 88.89%, Haier executives
accounted for 80%, indicating that the acquirer holding more open mind than the
acquired to make the cultural integration of the two companies. Overall, the recovery
in all 10 questionnaires, 82% of people believe that employees of Sanyo Electric can
be well integrated into the Haier Group's culture within two years.
Therefore, the conclusion of Assumption One is correct.
Table 4-2 Statistical table of the biggest problems faced in the cultural
integration process of enterprises
S
anyo
employees
Sany
o executives
Haier
employees
Haier
executives
The impact of
cultural differences
1
5
1 14 1
HR
mismanagement
5 1 6 1
The Problem of
corporate cultural identity
2
4
2 23 3
other reasons 1 1 2 0
It can be seen from Table 4-2 that 26 employees in Sanyo believe that the
problem of corporate culture identity is the biggest problem faced by two enterprises
in the process of cultural integration, accounting for 52%, mismanagement of human
resources accounted for 12%, the impact of cultural differences brought accounted for
32%, and other reasons accounted for 4%, for Haier employees, the proportion of
degree of corporate culture identity is also the highest, accounting for 52%,
mismanagement of human resources accounted for 14%, the impact of cultural
differences brought accounted for 30%, and other reasons accounted for 4%.
Therefore, the conclusion of Assumption Two is wrong, the correct
conclusion is: issue of corporate culture identity is the biggest problem faced in the
process of integration of corporate cultures.
Table 4-3 Statistical tables of the survey on the largest cultural differences
between the acquiring enterprise and the acquired enterprise
Sanyo
employees
Sanyo
executives
Haier
employees
Haier
executives
proces
sing mode
15 3 20 3
Corpor
ate beliefs
7 1 4 2
Values 8 1 5 0
Cultur
al image
7 0 5 0
The
others
8 0 11 0
As can be seen from Table 4-3, in all factors, the proportion of the corporate
processing mode accounted for the most, accounting for a total of 41%, other factors
accounted for a relatively small proportion of all, of which corporate beliefs
accounted for 14%, values accounted for 14%, cultural image accounted for 12%, the
others accounted for 19%.
Therefore, the conclusion of Assumption Three is correct, that is the biggest
difference between Haier and Sanyo Electric in the corporate culture is the corporate
processing mode.
4.7 Experiences to the cultural differences
First, in terms of history, Sanyo Electric set up earlier than the establishment
of Haier, compared with Haier Group, Sanyo Electric has more management
experience, way of thinking and communication and so on, therefore, Haier Group
has actively learned from Sanyo Electric's relevant experience; in addition, in order to
cope with the integration of culture, Haier Group has taken an inclusive attitude on
religions and other aspects, allowing corporate employees to have different religious
beliefs.
Second, Haier Group has developed a number of new regulations for Sanyo
Electric, carry out cultural propaganda activities as well as some mental health
education activities, and give psychological counseling to those who can not adapt to
the new corporate culture , trying to guide the integration of culture.
Third, Haier Group specifically hired a senior manager with rich
management experience and experience in studying in Japan for Sanyo Electric,
leading Sanyo Electric into the integration of new businesses. Because of his unique
personal charm, it has played a significant role in promoting the integration of
corporate culture.
Fourth, Haier Group took a special cultural training for employees of Sanyo
Electric, giving the introduction of Chinese corporate culture. Let both sides of
employees understand the corporate culture and form a correct understanding. It is
important for the two sides to build mutual understanding and trust, to avoid conflicts
arising from cultural differences to the maximum extent and to promote new
corporate culture integration. Specific training content may include: cultural
awareness, cultural sensitivity training, language learning, intercultural
communication and conflict management, etc.
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.
1
1.
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