The joy Of International Business

When looking at a country from another cultural background, you tend to wear a kind of “cultural eyeglasses.” You often interpret everything from your own cultural conditioning. Things may seem irrational, frustrating, or upsetting, simply because of that conditioning. This is fertile ground for future conflicts in many areas. To me, culture is an iceberg, where the main force is resting beneath the surface.

There are two major, typical miscalculations foreign corporations tend to make when they approach the Indian market.

Read the rest of this entry »

Economic pressures developed within the framework of a global marketplace have led to unprecedented numbers of mergers and acquisitions over the past decade.

The number of mergers and acquisitions involving US companies alone in 2004 reached 376 with an aggregate total paid of US$22.64 billion. In comparison, in 2003, the total amount paid was US$12.92 billion.

However, statistics show that the failure rate of most mergers and acquisitions lies somewhere between 40-80%. If one were to define ‘failure’ as failure to increase shareholder value then statistics show these to be at the higher end of the scale at 83% (Cnnfn.com 1999). The facts highlight a worryingly poor success rate for international mergers and acquisitions. Why?

Many business commentators are now acknowledging that failure does not have its roots simply in financial, monetary and legal issues but in lack of intercultural synergy. Research suggests that up to 65% of failed mergers and acquisitions are due to ‘people issues’, i.e. intercultural differences causing communication breakdowns that result in poor productivity.

A recent example of such intercultural failure has been that of DaimlerChrysler. Both sides in the partnership set out to show that intercultural hurdles would and could be overcome in their global merger. Recent articles in the Wall Street Journal and Business Week suggest however that DaimlerChrysler underestimated the influence of culture, and due to culture clash, almost two years later is still struggling to become a unified global organization. Read the rest of this entry »