Question

Cultural differences, while difficult to observe and measure, are obviously very important. Failure to appreciate and account for them can lead to embarrassing blunders, strain relationships, and drag down business performance. While some organizations are able to make cultural diversity a source of advantage, others do not. Identify a recent situation in the news in which an organization failed to take into account the various cultural norms of stakeholders. What happened? Where did they fail and what would you recommend based on your readings, research, and Hofstede's Cultural Dimensions?

Answer 1

One of the ways companies try to expand their business is through mergers and acquisitions. Cultural alignment as well as cultural integration forms the fundamental basis for success or failure of any merger. When 2 companies are merging, 2 cultures are collaborating and merging as one. So, it is the duty of the leaders and the management of the companies to handle the culture change and integration effectively and make the employees and its own culture flexible to embrace it. If this culture alignment is missing between the 2 companies, the merger is can be considered doomed and fated to be unsuccessful.

The merger of American Chrysler with German Daimler was being considered as the biggest merger of all times and a merger of the equals. Both companies had high hopes with the resultant merger. However the leaders and the management failed to take care of the stark difference between the Germans and the Americans and this eventually led to the downfall of both the companies. The merger could have been successful if the cultural difference between the two companies, the difference in the level of formality and the difference in their business ideologies had been taken care of and merged with care and trust. The change process was not even well communicated to the employees of the both companies, and hence they resisted the change.

The management of both the companies had not addressed the underlying assumptions of the differences in their cultural disposition. The leaders needed to strategize the change i.e. the merger process keeping the cultural artifacts and the espoused values of both the companies into consideration. The failure of the management in doing so, led to failure of the culture change, which in turn adversely impacted the merger.

The leaders of both the companies need to explore the cultural differences of both the companies based on Hofstede’s cultural dimensions.

Based on Hofstede Cultural dimensions, given below is the cultural analysis of Germany:

1. Power Distance: The Germans value equality and collaborative form of doing business. Organizations are usually flat and managers are easily approachable. Employees also have the right to express his point of view, freely to the management.
2. Individualism: The country is moderately individualistic. Germans prefers thriving in their own family rather than socializing in groups. Favoritism and bias is quite common in business.
3. Masculinity: The Germans form a masculine society. They like competition in business and aim to be the best.
4. Uncertainty avoidance: Germans are highly risk aversive. They hesitate in any decision which lacks clarity. German companies want detailed terms and conditions in any kind of business agreement and are quite aversive to any kind of change.
5. Long Term Orientation: The Germans are future oriented and their business plans have long-term orientation.

Given below is the analysis of cultural dimensions of USA, based on Hofstede Cultural dimensions:

1. Power Distance: America values equality and participatory form of doing business. All are considered equal and there is not much hierarchy. Organizations also have flat structures. Every employee of the organization has equal rights of expressing his concerns.
2. Masculinity: America stands high on the masculinity quotient of cultural dimensions. Americans love being competitive and are always ready to take challenges. The overall society aspires to become achievers. Success is what matters the most to them, the path followed to achieve success is not considered important.
3. Individualism: USA is highly individualistic country. The nation prefers nuclear family than joint ones. Preference is given to family over others. Loyalty is also biased towards personal favorite entities in business
4. Long Term Orientation: Americans live in the present and care very less about the future. They believe in attainment of short-term goals and do not worry much about the long term objectives
5. Uncertainty avoidance: USA is a risk taking country. They like to grab opportunities, without giving much considerations to the outcome. They accept change with open hands.

If the managers of both Daimler and Chrysler had made a note about the cultural orientation of both the countries, things could have been quite different for the merger.

Employees of both the companies also played an important factor in the failure of this merger process. The employees were highly resistant to change and they acted as roadblock to the merger process. Some of the strategies, which can be used by the manager to overcome the employee resistance and facilitate the strategic merger change process are

• The objectives and goals of the transformational change must be very clear
• All the stakeholders must have clarity about the objectives, features and benefits of the change process
• A dedicated change management team must be selected for executing the change process, which must have members of all employee groups. These members will act as change agents
• The available resource must be evaluated effectively so as to determine their usage in the change process
• The leader and the change agents must address all inhibitions of the stakeholders
• Comprehensive risk assessment of the change process must be conducted, so as to Identify the potential barriers to the change
• The change management plan must be formulated in a way to address each identified barrier