The main drivers responsible for the Lenovo-IBM merger were Firstly, the need to go global

from the Lenovo’s side. Due to high competition in China, growth was difficult, thus the need to
look for opportunity outside of China. Secondly, the financial crisis IBM was in as its PC
division had acquired a huge loss in millions and announced departure from the market Koster,
K. and Stajl, G.K. (No Date) .They had become more of a software service provider rather than
hardware and suffered huge profit drain. This was a great opportunity for both companies as
IBM not only sold the department that cost them financial drain but also had access to the
Chinese market. Lenovo, on the other hand, achieved their goal of reaching the global market
being able to use IBM name for 5 years, acquiring IBM technology and had better hand with
suppliers Koster, K. and Stajl, G.K. (No Date). An effective acquisition would offer Lenovo
access to IBM’s international awareness and brand reputation including structured and well
organized marketing system with a network team in 160 countries Thomas (2016). IBM was
known to own highly capable and proficient staff including a reliable customer base. The merger
would turn Lenovo to the third largest PC supplier globally (Lenovo Press Release, 2004, 7
December, cited in Thomas, 2016).
Muhammed and Hadi claims that for a successful incorporation of Merger and Acquisition,
culture compatibility is required. When cultures are well combined in acquired companies it
leads to high quality in performance and profit. At the initial stage of the acquisition, the cultural
difference between the Chinese and their American colleague was obvious and had a huge
impact on Lenovo’s organizational behavior. For example, when the Chinese partners responded:
Shi, “shishi” which means “yes yes yes” in a meeting, the US group accepted this as a symbol of
agreement but the Chinese were just saying “we hear you please continue”(Holstein, 2004 Cited
in Muhammed and Hadi, 2016). Time-zone difference also had a great impact on the merger.
Most times they had to hold their meetings at odd times, having just 3-4 hours to do work
together which had effect on their staff social-work life balance. Another difference was in their
method of welcoming visitors or a high profile individual. Yang and his team arrived the airport
with no IBM member to welcome them during their negotiations. Such custom is unacceptable in
China where visitors are received with equal ranking staff Koster, K. and Stajl, G.K. (No Date).
Organization culture played a part in the merger as seen in the hierarchical leadership pattern in
Lenovo as against the process oriented style in IBM. At IBM, bottom up style exist where junior
staff are allowed to question senior members ideas as opposed to Lenovo style Thomas (2016).
This means the culture of organization can affect decision making and problem-solving quality.
Also while Lenovo had a strong belief that you must execute whatever plan you sign up for, the
IBM had none of such belief. Though, they both had similarity in belief with regards to
innovation, dedication, duties and receptiveness to customers need Koster, K. and Stajl, G.K.
(No Date). However, the resignation of Steve Wards as CEO of Lenovo-IBM in 2005 was
perceived to be as a result of his inability to adjust to the new company culture having being
embedded into the IBM culture Mohammed and Hadi (2016).
Studying the Lenovo-IBM Merger, It is noted that culture integration was a huge factor to the
success of its merger. Comprehending cultures, be it national, regional or organizational is key.
There are many cultural models applicable in a globalizing world. One of the theories still
helpful in a globalizing world today is Geert Hofstede’s model which is useful in understanding
the differences between the countries been studied. The Hofstede’s model includes 5 dimensions
which are: power distance, individualism vs collectivism, masculinity vs feminity, uncertainty
avoidance and long term orientation vs short term orientation Schedilitzki (2018). Chinese
culture approaches are designated by high power distance, masculinity, collectivism and high-
uncertainty avoidance while the American culture attitude is indicated by low power distance,
individualism and low-uncertainty avoidance. Hofstede’s model is still applicable in modern
organization today. The different beliefs and values emanating from employees in organizations
based on Hofstedes model proves that some aspects of culture have effect on individual’s action
and behavior and can influence business results. Power distance is useful in separating levels of
inequality, approaches towards distributing power and status and the readiness of junior workers
to disagree with senior members Schedilitzki (2018). Therefore, its model is indeed important
and useful in understanding differences between these countries as studied and in modern world
today.
 References

Koster, K. and Stajl, G.K. (No Date) ‘Lenovo-IBM: Bridging Cultures, Languages and Time
zones’ Available at: https://vle-usw.unicaf.org/course/view.php?id=2821#section-6 (Accessed:
14 May 2020).

Muhammed, A. and Hadi, I. (2016). ‘Merging Cultures in International Mergers and

Acquisition: A Case Study of Lenovo's Acquisition of IBM PC Division’ Journal of
Intercultural Communication ; Göteborg (41). Available at: https://search-proquest-
com.ergo.southwales.ac.uk/docview/1963398839?
OpenUrlRefId=info:xri/sid:primo&accountid=15324 (Accessed: 14 May 2020).

Schedlitzki, D. and Edwards, G. (2018) ‘Studying Leadership’ Available at:

https://unicaf.vitalsource.com/#/ (Accessed: 14 May 2020).

Thomas, M. (2016) ‘Lenovo’s successful acquisition of the IBM PC Division’ Strategic

Direction 32(9), pp. 32-35. Available at: https://www-emerald-
com.ergo.southwales.ac.uk/insight/content/doi/10.1108/SD-06-2016-0090/full/pdf (Accessed: 14
May 2020).