WHY MERGERS FAIL

The difficulty of coping with different

cultures in mergers and acquisitions

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 EXAMPLE 1
THE INDIAN CASE OF MERGERS
AND ACQUISITIONS

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THE INDIAN QUESTION (AND OTHER
EMERGING COUNTRIES)

• 2002-2006: steep rise of Indian foreign

acquisitions
• Will the Indian acquisitions face the same
cultural challenges as the Western? What is
their experience in the field of international
mergers?

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 THE IMPACT OF CULTURE ON HRM
• Why there are differences between indian and western
companies:
• Power and authority relationships
• Coping with uncertainty and risk-taking
• Interpersonal trust
• Loyalty and commitment
• Motivation
• Control and discipline
• Communication
• Consultation
• Participation
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THE IMPACT OF CULTURE ON HRM
• Tayeb (1988) – Indian vs English organizations:
• Shared characteristics: specialization
and centralization
• Contrast: consultation and delegation
of authority
• English employees communicate more

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 EXAMPLE 2
THE CASE OF DANONE
MERGER IN RUSSIA
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 DANONE IN MOSCOW
• Russian mindset still based on the Soviet legacy of
a centrally planned, production-oriented
economy in the 90’s
• Russians not yet ready for empowerment or
participatory management
• Russian employees want job security and stability
• First action: re-assurance
• Tight control over decision-making
and information flow

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EXAMPLE 3. MERGER OF DAIMLER-BENZ AND
CHRYSLER
One of the world's leading car and truck manufacturers. Daimler-Benz
was formed with the merger of Benz & Cie. and Daimler Motoren
Gesellschaft in 1926. The company was renamed DaimlerChrysler upon
acquiring the American automobile manufacturer Chrysler
Corporation in 1998, and was again renamed Daimler AG upon
divestment of Chrysler to Cerberus Capital Management in 2007
(Chrysler is currently owned by Stellantis). In 2021, Daimler AG is the
second-largest German automaker and the
sixth-largest worldwide by production.

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 MERGER MISMATCH
• The merger between Daimler-Benz (Mercedez)
and Chrysler (1998)
• Giant merger: $132 billion in annual revenues
• $5.8 billion loss in 2001
• Merger ended in 2007

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 REASONS FOR THE FAILORE OF THE
MERGER
• Different cultures and management styles
• Daimler-Benz: methodical decision-
making, values respect for authority,
bureaucracy, …
• Chrysler: creativity, values adaptability and
resilience, efficiency, empowerment,
egalitarianism, …
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 EXAMPLE 4. VOLVO
• The Volvo –Ford –Geely saga
http://businessinscandinavia.org/volvo-mergers-and-employee-relations/

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 EXAMPLE 5. WALMART IN GERMANY
• Walmart (food retail) retreats form Germany

https://bettermarketing.pub/why-walmart-failed-in-germany-3fdcc646
9b89

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 THE IMPACT OF CULTURE ON HRM

• It is all about the culture !!!

• Strong need to study impact of national
cultures on organizational life
• Management practices are heavily
influenced by collectively shared values
and belief systems
• Contradiction: Develop corporate identity
or be effective locally?
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 ROLE OF THE MANAGER, LEADERSHIP AND
MANAGEMENT STYLES

• Leadership style is a key determinant of the

organizational context in which HRM policies and
practices are developed
• Understand the impact of national culture by looking at
how people lead
• Leadership: vision, communication & motivation

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BASIC INSIGHTS ABOUT INTERNATIONAL
LEADERSHIP

• Is being a good leader the same in US, EU and China

• Strong connection between culture and leadership
• Different managerial values across nations

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 It is important for a manager to
have at hand practical answers
to most of the questions that
his or her subordinates may
raise about their work

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 LITTLE SURVEY

• What do you think is the most important characteristic ?

• What do you think is the least important characteristic?

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• https://www.ted.com/talks/margaret_heffernan_the_human_skil
ls_we_need_in_an_unpredictable_world/transcript

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IMPORTANCE OF INTRA VARIANCE IN
COUNTRIES

• EXAMPLES OF INTRA VARIANCE

• In US, there is a difference between (Nordeast,
West, Midwest, and coast)
• In EU, the differences between Scandinavian
countries, Germany, Southern countries
• Even Belgium: difference between North and South

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 QUESTION
• Look to your own country. Is there a difference between North and
South of Vietnam? If yes, what could be the differences?
• Is there a difference between city culture and the country side? What
is the difference between people working in a city and people working
in the countryside?
• Give examples !

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