Professional Documents
Culture Documents
The company was founded in Barcelona in the mid 40s and registered growing profits for decades due to
its reputation and the quality of the provided services. It experienced a decline in contracts and this led to
acknowledging the dependence of Martinez Construction Company on the local economic conditions.
Strong evidence pointed out that the family business could have continued if an international expansion
took place. The best opportunity seemed the Eastern European market, influenced by the recent collapse
of communism, opening of markets in that area, cheap work force and raw materials. After a thorough
research, Diego Martinez, the president and son of the founder of Martinez Construction, came to the
conclusion that the acquisition of an existing company from the Treuhandanstalt (THA) worlds largest
holding company, would be the best option. A reason for this was the fact that the construction company
did not have the resources needed for a Greenfield operation. Also, it could not have been considered as a
serious competitor in the international market for construction. Juan Martinez, Diegos brother in law
and the manager of the Martinez Constructions branch in Barcelona, was appointed as negotiator with
THA, while Diegos nephew, Miguel, was the projected manager of the acquisition in Germany.
Presentation of Treuhandanstalt
It was initially created in the German Democratic Republic with the purpose of finding private buyers for
approximatively 13500 business and 15000 parcels of real estate. THA sold companies internationally and
matched existing companies with potential buyers. What mattered the most in conducting the business
was the speed of the sale. The companies with which THA negotiated were required to pay attention to
certain elements: price of acquisition, guaranteeing work places for local employees and the method used
for improving the economic activity.
THA found a match for Martinez Construction Company Konstruktion Dreizehn, a company located in
Leipzig. Miguel and Juan were to deal with the negotiation process regarding the German acquisition.
Opinions
Two generations of
Rumors
Concrete facts
in the mid-1940s.
Martinez
Germans.
future.
Collapse of
communism and
subsequent opening
conditions
of new markets in
Eastern Europe
provided what
marketplace
Opinions
Rumors
Concrete facts
seemed like an
excellent opportunity
for expansion.
venture will be
through the
acquisition of an
from the
Construction lacked
necessary to risk a
Greenfield Operation.
An alliance with
other German
allow Martinez
Construction to
establish itself as a
the international
Construction market.
Difficult getting
companies)
Germans
Martinez
serious competitor in
the resources
existing company
Treuhandanstalt.
Democratic Republic
THA representatives.
urgency to complete
contract
Opinions
Rumors
of their approach.
agreement.
Appreciation of the
negotiations were
organized.
Frustration resulted
from the
unwillingness of
some employees to
actively participate in
the formulation of
ideas and
Concrete facts
implementation of
policies.
and distrust of
management.
Solutions: Expand to the international market seems a solution. With the reunification of Germany and
the collapse of Communism, a lot of new markets have opened and it would be a great opportunity for the
construction company.
Effects of solutions: Lower salaries and lower prices for the raw materials. They could expand by
spending less money that can be really valuable for the company and be a standard construction company
at the International and more importantly first in Europe.
Optimal solution: international expansion
Problem 2: difficulties regarding the attempt to expand internationally (i.e. communication)
Cause: the differences between the two cultures regarding doing business (i.e. Spanish people do not
care about being late, about authority and hierarchy. They want to trust the people first by talking to
them, have fun with them and finally, speak about business without entering in all the details. On the
contrary, Germans separate business and pleasure because they are more reserved, the hierarchy is really
important to them and the details and terms of contracts must be studied and done perfectly)
Effects: problems regarding communication and misunderstandings. For any terms of the contract there
will be a fight because of the cultural dimensions that are really different between the two countries. The
Spanish managers cannot understand the way Germans are doing business and are not pleased by the way
they are welcomed in the country. The THA representatives presented Juan an already prepared contract,
which was considered by the Spanish party as unsuitable as it lacked the financial analysis. They managed
to reach an agreement a phased contract, benefiting the Spanish, but making the Germans feel
uncomfortable, as this new agreement did not have technicalities. The fact that Juan arrived 15 minutes
late bothered the German party and made them feel nervous. Juan was not in his element when his
counterparts disliked the idea of showing him the city as they were more focused on the business itself,
rather than the relationship between them.
Solutions: The people in both cultures should read more about the Hofstedes Cultural Dimensions to
know how the business works in the other country and learn about the differences between them. They
would have to decide between moving forward with the business, but modifying the contract after 2 years,
and shutting it down.
Effects of solutions: if they decide to continue with the business, they will reach a compromise, they
will get to understand the differences and learn how to work around them, thus managing to increase the
revenues and profits. On the other hand, if they come to the conclusion that ending the agreement is the
best solution, they could end up registering losses, wasting resources and not expanding internationally,
thus remaining dependent on the local economic conditions.
Optimal solution: it is better for the Spanish to go on with the contract and modify it after two years,
because they already paid a lot with the investment, the study of the market and the trip. They also spent a
lot of time finding the company and keeping in touch with THA.